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Voluntary Quits: Do Works Councils Matter? An Analysis of the Reform of the German Works Constitution Act 2001

Author

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  • Adam Julian B.

    (Department of Economics, Friedrich-Alexander-University Erlangen-Nuremberg, Nuremberg, Germany)

Abstract

Most of the literature on the effects of German works councils does not deal with the issue of potential endogeneity of works council existence. Exploiting exogenous variation in works council authority stemming from a 2001 reform of the German Works Constitution Act, I apply a regression difference-in-difference using establishment panel data. I find that increasing works council size and the introduction of one full-time councilor causally reduces the number of voluntary quits by about 30 %. This decline is driven entirely by collective voice effects and there is no evidence for monopoly effects in place. Similar to the findings of previous research, the effect is significant only in establishments which are subject to a collective agreement. The results suggest that the effectiveness of works councils either heavily relies on the support of unions, or that works councils mainly serve as a guardian of collective agreements.

Suggested Citation

  • Adam Julian B., 2019. "Voluntary Quits: Do Works Councils Matter? An Analysis of the Reform of the German Works Constitution Act 2001," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 239(1), pages 67-109, January.
    • Handle: RePEc:jns:jbstat:v:239:y:2019:i:1:p:67-109:n:1
    DOI: 10.1515/jbnst-2017-0164
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    Citations

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    Cited by:

    1. Steffen Mueller & Georg Neuschaeffer, 2021. "Worker Participation in Decision‐making, Worker Sorting, and Firm Performance," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 60(4), pages 436-478, October.
    2. Simon Jäger & Shakked Noy & Benjamin Schoefer, 2022. "The German Model of Industrial Relations: Balancing Flexibility and Collective Action," Journal of Economic Perspectives, American Economic Association, vol. 36(4), pages 53-80, Fall.

    More about this item

    Keywords

    works councils; codetermination; industrial relations; quits; collective bar-gaining;
    All these keywords.

    JEL classification:

    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
    • J53 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Labor-Management Relations; Industrial Jurisprudence
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs

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